Franchise Business Insurance

Franchise Insurance

Get customized, low-cost franchise liability insurance for franchisees and protect your finances and assets

Zensurance - Franchise Liability Insurance

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What is franchise insurance?

Insurance for franchises is a customized policy containing various coverages designed to protect Canadian entrepreneurs who become franchisees in a broad range of industries from the many liability and legal risks they face operating a franchise.

Franchisees face various liability risks inherent in operating a franchise. Addressing these risks with a comprehensive insurance policy is crucial for their success and financial well-being.

A typical franchise liability insurance policy may feature the following types of coverages:

  • Commercial General Liability (CGL) Insurance: CGL, or general liability insurance, is the foundation of every franchise liability insurance policy. Commonly called ‘slip-and-fall’ insurance, CGL covers you for claims or allegations of third-party bodily injuries and third-party property damage that may occur on your commercial property or as a result of your business’s daily operations.

CGL also includes tenant legal liability coverage for repairing or replacing damaged property that you rent, lease or occupy, protection to deal with allegations of defamation or false advertising, and product liability insurance to cover third-party bodily injury or property damage claims caused by any product you manufacture, distribute, or sell.

  • Commercial Property Insurance: Commercial property insurance covers the business space your franchise occupies, whether you own, rent, or lease it. It protects the building and your business contents (electronics, furniture, office equipment) and inventory from damage or loss due to fire, water, extreme weather or a natural disaster, vandalism and theft (like a break and enter). It also includes coverage for any improvements or renovations you make to a rented or leased space, such as lighting, flooring, or painting.
  • Equipment Breakdown Insurance: Equipment breakdown insurance pays to repair or replace your franchise’s equipment or machinery up to the policy’s coverage limit if it ceases to operate because of an internal electrical or mechanical failure. It covers various equipment, such as commercial kitchen appliances, HVAC systems, alarm and security systems, computers, point-of-sale (POS) systems, and other electronic office equipment.
  • Errors and Omissions (E&O) Insurance: E&O insurance, or professional liability insurance, protects you from allegations or claims of professional negligence, misrepresentation, mistakes, omissions, misconduct, and failure to deliver a service as promised. Any franchisee providing advice or services for a fee or who provides or develops products or devices for customers and partners should carry E&O insurance.
  • Cyber Liability Insurance: Cybercrime is a serious and significant threat to every franchisee or small business. Cyber liability insurance is designed to help your business recover quickly if you’re targeted by a cyber-attack or suffer a data breach that exposes or exploits your and your customers’ confidential data. It covers your costs for legal advice, crisis management services, credit monitoring, and repairs or restoration of your software systems damaged by a cyber-related event. It also includes support for the losses your business sustains due to a system outage because of a cyber-attack.

Any franchise or business that has a website, uses email, has a point-of-sale (POS) system, uses computers or cloud systems to store data, or provides computer hardware and software to customers should have cyber liability insurance.

Like any policy, insurance franchise costs vary by insurer. The premium your franchise pays depends on a variety of factors about your business, including:

  • Your location
  • The type of franchise you own and operate
  • The products and services you provide
  • How many employees you have
  • Your years of experience as a franchise owner
  • The equipment you own or rent on your premises
  • Whether or not you serve alcohol
  • The insurance coverages you choose and your policy limits
  • The deductibles you select
  • Your annual and gross projected revenue
  • Your insurance claim history

Any industry where Canadian entrepreneurs and small business owners become franchisees and operate a business using established brand names, trademarks, products and systems of a franchisor should have a comprehensive franchise business insurance policy, including:

  • Fast food and quick service restaurant franchises
  • Coffee and beverage cafe franchises
  • Retail and convenience store franchises
  • Fitness and wellness franchises
  • Hospitality and lodging franchises
  • Automotive retail and service franchises
  • Real estate and property service franchises
  • Pet care franchises
  • Education and tutoring franchises
  • Private healthcare franchises
  • Tax and financial services franchises
  • Computer and electronics repair franchises
  • Home improvement and renovation franchises
  • Travel and leisure franchises

Getting insured is quick and easy!

Complete our 5-minute online application for a free franchise liability insurance quote.

Common claims scenarios

coffee shop franchise business

Problem: A customer visiting your coffee shop slips, falls, and is injured on a wet floor. They require medical attention and threaten to sue you for damages.

Outcome: Your commercial general liability insurance may pay for the injured customer’s medical and rehabilitation expenses and provide you with funds for your legal defence and a settlement.

Problem: A tax and financial services franchise is accused of making an error on a customer’s tax return that resulted in the Canada Revenue Agency auditing and charging them several thousands of dollars.

Outcome: Your E&O insurance may pay the customer’s fine and provide you with funds to retain a lawyer if the customer takes legal action against you.

Cyber security coverage franchise

Problem: A hacker gains unauthorized access to your franchise’s server and stored data and launches a ransomware attack against you. They take your website offline, steal your data, and demand payment or they won’t release your data.

Outcome: Your cyber liability insurance may cover restoring your compromised data and website, paying notification and credit monitoring fees for your affected customers, and providing you with funds to seek legal counsel.

Frequently asked questions

Are franchisees required to purchase insurance through the franchisor’s recommended provider?

Not necessarily. While some franchisors may have preferred insurance providers, franchisees can choose their insurance company or broker. Regardless, ensuring that your coverage meets the franchisor’s requirements is essential.

Does my franchise need umbrella liability insurance?

Umbrella liability insurance provides additional coverage beyond the limits of your primary policy. It offers extra protection if a large liability claim exhausts your policy’s coverage limit. Speak to a Zensurance broker about your business’s coverage limits and if you need to add umbrella insurance to your policy.

Do franchisees need insurance if the franchisor provides some coverage?

While your franchisor may provide some liability coverage, it is often limited or has gaps, exposing you to financial losses in the event of a claim or lawsuit. Franchisees are typically responsible for obtaining comprehensive insurance that meets the franchisor’s requirements and adequately addresses the specific risks of their operations.

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Ready to start? Let’s get a quote!

Get the protection your franchise needs to safeguard your assets and financial wellness with a customized franchise business insurance policy from Zensurance.

Fill out our online application for a free quote. Our licensed brokers are commercial insurance experts who will shop our partner network of over 50 insurers to get the low-cost policy your franchise requires, advise you on what you need and don’t need, and tailor the policy to account for the liabilities you face.